Asian shares have been on an uptrend as risks from the eurozone debt crisis and the U.S. fiscal impasse abated and signs ofrecovery emerged in major economies including China. Corporateearnings have also been generally positive.

"The tide continued to push higher for equity markets acrossAsia today, with solid leads from Europe and the U.S. enough tokeep traders in a buying frame of mind," said Tim Waterer,senior trader at CMC Markets.

News of new possible mergers boosted U.S. stocks on Tuesday,pinning the benchmark Standard & Poor's 500 Index near afive-year high, while European shares rose after the German ZEWinvestor sentiment index rose to a three-year high.

European markets will likely consolidate, with financialspreadbetters predicting London's FTSE 100, Paris'sCAC-40 and Frankfurt's DAX would open down 0.1percent. U.S. stock futures were flat to suggest asubdued start for Wall Street.

The MSCI's broadest index of Asia-Pacific shares outsideJapan added 0.8 percent, up for a third day in arow, led by a 1.9 percent gain in its technology sector. The index has risen 4.3 percent year to date.

South Korean shares outperformed their peers with a1.8 percent jump to a one-month high, as foreigners stepped upbuying and a pause in the yen's falling trend soothed sentiment.

Positive growth in Southeast Asia has drawn foreigninvestors, keeping regional stocks robust. The Philippines stockmarket extended gains to a record high while Bangkok'sSET index hit a fresh 18-year high.

Rallying stocks weighed on assets perceived as safe-haven,with spot gold inching up 0.2 percent to $1,606.84 anounce but stuck near a six-month low.

Asian credit markets took their cues from stocks, tightening the spread on the iTraxx Asia ex-Japan investment-grade index by two basis points.

London copper edged up 0.2 percent to $8,067.75 atonne, off Tuesday's three-week lows.

"A shift to cyclicals from defensives has come full circleand investors are now looking at sector-specific factors withinan asset class, selecting those with a tight supply/demandoutlook," said Naohiro Niimura, a partner at research andconsulting firm Market Risk Advisory.

He said industrial metals and oil are favoured by investors.Within base metals, copper will likely rise further as economicactivity increases, as will Brent crude oil, while U.S. crudewas seen weighed by ample supply.

U.S. crude steadied around $96.72 a barrel but Brent eased 0.2 percent to $117.31.

Platinum and palladium also have further upside scope due tosupply concerns.

The rise in equities weighed on assets perceived assafe-haven, such U.S. Treasuries and gold on Tuesday. Spot gold inched up 0.2 percent to $1,607.94 an ounce, but hoverednear a six-month low hit the day before.

YEN INSTABILITY RISES

Tokyo's Nikkei stock average closed 0.8 percenthigher at its highest close since late September 2008.

The yen remained jittery, swinging in narrow ranges onconcerns Japan may not be able to pursue as strong areflationary policy mix as previously perceived.

The government delayed nominating a new Bank of Japangovernor, fuelling talk of friction between the prime ministerand the finance minister over who is best suited to implementthe bold steps needed to reignite the economy.

The G20 meeting last weekend gave tacit approval to a weakcurrency as long as it was as a result of domestic monetaryeasing, but maintained its traditional opposition to currencymanipulation aimed at fostering exports and growth of one country at others' expense.

"In light of the G20 statement to avoid competitivedevaluation, it will be difficult to talk down the yenspecifically. I think the onus now is on policy to do the work,"

said Sim Moh Siong, FX strategist for Bank of Singapore.

The dollar fell 0.4 percent to 93.15 yen, off itshighest since May 2010 of 94.465 hit on Feb. 11. The euro eased0.3 percent to 124.91 yen. It touched a peak sinceApril 2010 of 127.71 yen on Feb. 6.

Sterling was under pressure on growing speculation the UKcould soon lose its prized triple-A credit rating. Sterlingtraded at $1.5444, having plumbed a seven-month low at$1.5414 in New York.

Investors remained wary of possible U.S. federal spendingcuts and outcome of the upcoming Italian election. They alsoawaited the release later in the session of the minutes of theFederal Reserve's January policy meeting for clues to its futurebond-buying plans.

The ZEW report was a positive sign ahead of the moreimportant euro zone flash PMIs on Thursday and Germany's IFObusiness sentiment on Friday, said Vassili Serebriakov, astrategist at BNP Paribas.